Thrutch

Commentary from a pro-reason, pro-egoism, pro-capitalism perspective

Saturday, February 28, 2009

Politics without Ideas

An opinion piece in last week’s Wall Street Journal illustrates why one can’t seek to make significant or lasting change by simply targeting the political level. Politics is a reflection of the electorate (more and more so as we slide towards mob-rule democracy) and thus any attempt to bypass them and their ideas is futile.

As the story, which focuses on California’s woes, notes:

Six years ago, Mr. Schwarzenegger arrived in Sacramento to "cut up the credit card" and give the girlie men at the State Capitol a testosterone shot. California languished then in a fiscal crisis whose causes were pretty much the same as today. The hapless Gray Davis had been recalled, and the Austrian-born actor made a promising start to break the pattern.

In 2005, banking on his popularity, the governor pushed an ambitious ballot initiative to impose a hard state spending cap, limit the unions' political buying power, tighten requirements for teacher tenure, and overhaul a gerrymandered state political map. Arnold lost.

In essence, the electorate wanted tax cuts, but not spending cuts. And for decades, our voters have been taught that their civic duty consists in voting. Never mind having a consistent, non-contradictory set of principles which you uphold and work to institute — simply voting is deemed good enough.

And then when politicians can’t make this fantasy approach work, somehow it’s their fault. (Now don’t get me wrong, politicians often manage to distill the worst aspects of the people they govern, but in today’s world there is simply no way that a reasonable person could get elected. And this is the fault of the electorate at large.)

Why do the people believe that holding any hodge-podge set of ideas is enough? Because that’s what they’ve been taught in our educational institutions and that’s what they hear everyday on the news and in the media. And the teachers and pundits, in turn, have learned it from our cultural leaders, the so-called “intellectuals” who tell us that there is no firm reality, no ideas that are better or worse than others, that every side and every view is equally valid, etc.

Thus to change the political climate means changing the intellectual one — there can be no good political scene absent a culture animated by good ideas. Or to put it another way, trying to circumvent the causal chain of ideas is impossible (and therefore impractical).

This isn’t to say that one must target the intellectual leaders exclusively. For any person who becomes better educated will ask better questions and demand more from the media and the intellectuals, which places upward pressure on the chain. But fundamentally we need better ideas before we can expect better government.

Monday, February 23, 2009

No Change for the Republicans

This is hardly a revelation, but the GOP is really a complete joke. They are purportedly looking for "grassroots" ideas. I took the time to fill in their form, but when I got to the categories available to characterize my suggestions, there were none which remotely resembled "ideas" or "platform". Instead I could choose "Tool and Technology - Twitter and Micro Blogging" or "Training - Creative /Arts"! Turns out that their so-called "soul searching" is even more superficial than even a cynic like I would have ever thought possible.

(FWIW here are my suggestions to them:Biggest Problem (max 50 words): Your advocacy of religious morals and the resulting tendency towards big government and against individual rights.Solution (200 words max): Completely abandon religion (except for allowing freedom of conscience / religion). Unequivocally defend individual rights, including those to life, liberty, property and the pursuit of happiness. Abandon all regulation and instead allow men to freely pursue their own self-interest. Intervene ONLY if rights are violated, i.e. only if force (or fraud) are used against others.)

Undercurrent - Spring 2009

The newest edition of the Undercurrent is now available. I just read "Ayn Rand’s Non-Religious Conception of Morality" and definitely enjoyed it. The analysis of the appeal of religion I think is spot on, as is the proper alternative. Check it out.

Sunday, February 22, 2009

Virtual "Candidacy"

Brian Phillips has thrown his virtual hat into the Houston Mayoral race. I intend to support his "candidacy" and follow his "race", partly for the reasons he lists in his post:

Since I am approaching this as if I were actually running for the City's top position, I must keep in mind political and economic realities. For example, it would not be possible to eliminate taxes and privatize all city services in a single mayoral term (two years). Therefore, I will not advocate such positions. This does not mean that I will compromise; it means that I must recognize that creating more freedom must be a gradual process. Moving towards greater freedom is not as easy as throwing a switch. Weening the public from government services without creating chaos will require careful planning to insure an orderly transition.

I have two reasons for this virtual candidacy. The first is that it is an interesting intellectual exercise. It is one thing to advocate that all property be privately owned. It is another to lay out a plan to get from where we are to that ideal. When Margaret Thacher was dismantling the British welfare state, she created constituencies for her proposals. She appealed to the self-interest of the various individuals who would be impacted by her plans. She was able to get support for her proposals by doing this, and thus was able to get them implemented. My second reason is to be pro-active.

Rather than simply criticize the actual mayoral candidates, I will offer actual solutions. Rather than tell them what they are doing wrong, I will real solutions to the issues facing Houston. This is a form of intellectual activism.

For those who support freedom, my virtual candidacy will offer concrete, positive alternatives to the expansion of government. My platform will offer you ideas that stand in stark contrast to those offered by the mainstream candidates. These ideas will provide you with the intellectual ammunition needed to combat the trend towards greater government control of our lives.

Monday, February 16, 2009

Objectivism in the UK

Some encouraging news from the UK. Andrew Medworth (who is becoming a real intellectual force and whose blog I'd previously recommended) reports on Dr. Brook's recent trip, including a debate with a surprising outcome. Check it out.

Friday, February 13, 2009

WSJ Editorial Arguing For a Gold Standard

The WSJ has a generally good article proposing to restore the gold standard. I am of course in favor of that idea, but would quibble at some of the arguments used in the article. For example, I really wish it were true that: "If capitalism is to be preserved, it can't be through the con game of diluting the value of money. People see through such tactics; they recognize the signs of impending inflation." (emphasis added).

I also disagree with the idea that "the driving force of free-market capitalism is competition", rather the driving force is freedom (which is protected by the establishment of individual rights).

But I am on board with the more specific arguments, e.g. that there is nothing inherently wrong with price deflation, and that a "grass-roots" movement, in which gold is used as a parallel currency may end up being what ultimately accounts for gold becoming the de facto national currency.

Monday, February 02, 2009

Stop the Assault on our Public Markets

In a widely-circulated NY Times column (Jan 13, 2009), Bob Herbert proposes a 0.25% transaction tax on every stock trade. If this idea, which has been garnering support among politicians, passes into law, it will mark another devastating — perhaps fatal — blow to our public markets.

To appreciate what’s at stake, consider that public markets give companies easy access to a wide pool of investors from whom to raise capital. Simultaneously, they offer investors the ability to choose among thousands of opportunities to invest their savings. Public markets thus allow investors to efficiently allocate their capital to the most productive enterprises, fostering increased productivity and economic activity. Indeed it’s no exaggeration to say that America’s vibrant public markets played a significant role in her economic ascendance.

Yet public markets have been subject to mounting taxes and regulations for decades, reaching new heights with Bush’s passage of the sweeping Sarbanes Oxley bill (Sarbox). Instead of relying on existing laws, e.g. those against fraud used to prosecute Enron, Sarbox sought to police public companies regardless of wrong-doing, operating on the unjust idea that corporations are guilty until proven innocent. Notably, Sarbox made corporate leaders responsible for any errors or fraud committed within their companies, whether or not they knew of them; mandated onerous new annual audits; and turned corporate malfeasance into criminal offenses with penalties surpassing those for assault and other life-threatening crimes.

The results were predictable. Citing increased costs, a demotivating level of mistrust, and the desire to concentrate on customers rather than paperwork, many public firms went private, and many foreign firms listed elsewhere. Smaller firms, who could least bear the regulatory costs, delisted in droves; and the number of companies opting to go public dropped precipitously, from 250+ per year prior to Sarbox, to only 6 last year.

So Sarbox clearly puts public companies at a competitive disadvantage to their private counterparts. Yet public markets offer one benefit to mitigate these drawbacks: ample liquidity. Shareholders can increase or decrease their holdings whenever their circumstances warrant, and companies can easily raise additional capital.

Liquidity is a measure of the number of buyers and sellers of a stock. But even in public markets, liquidity isn’t automatic. Rather, it’s created by speculators, market-makers, hedge funds and other active traders who buy and sell stocks on a very frequent basis, trying to capture small price discrepancies with their trades. Typically their profits on any given trade are minimal, say less than 0.1% on average per transaction, but by doing hundreds of them each day, these traders can make money on the sheer volume of their activity.

The proposed transaction tax would eliminate the majority of short term trading, causing market liquidity to vanish — and with it, the one remaining advantage of being public. As such, it threatens to finish the destruction Sarbox started, ultimately eviscerating the public markets.

Ironically, those whom regulators and legislators claim to be protecting, viz. small investors, are among those most aggrieved by this destruction. For public markets — where it’s possible to buy a single share of a company — are among the few financial venues in which those with limited capital can participate and grow.

Thus the assault on public markets — by preventing enterprising small businessmen from growing via IPO, and by eliminating a critical venue for astute small investors to build their wealth — has the effect of entrenching the status quo. No longer is it possible for the talented newcomer, whether businessman or investor, to climb the economic ladder.

But it doesn’t have to be this way. Historically an important moral appeal of laissez-faire capitalism was that it allowed social and economic mobility according to effort and ability. If we return to it, those virtues will once again prevail. Rejecting the proposed transaction tax — and the whole assault on our public markets — may be a fitting place to begin.

Sunday, February 01, 2009

OActivist January 2009 Compilation

I've just put up a compilation of the great work people on Diana Hsieh's OActivist list have been doing. Check it out, and use it as inspiration to join the cultural battle -- it's much less daunting than it may seem!

Ideas cannot be fought except bymeans of better ideas. The battleconsists not of opposing, but ofexposing; not of denouncing but of disproving; not of evading,but of boldly proclaiming a full,consistent and radical alternative.
-- Ayn Rand